Ms. Diane Rheaume
Canadian Radio-Television and Telecommunications Commission
Ottawa, ON
K1A 0N2
Dear Ms. Rheaume:
Re: Follow-up to Decision CRTC 2002-34:
Detailed Billing Statements
1. In para.805 of Decision 2002-34, the Commission initiated a process to determine whether Bell Canada and Aliant Telecom should be required to provide itemized billing statements to their customers on a monthly basis. The following comments are submitted on behalf of the Consumers’ Association of Canada, the National Anti-Poverty the Organization, and l’Union des consommateurs (previously “Action Réseau Consommateur”) (“the Consumer Groups”), pursuant to that process.
2. Most major telephone companies in Canada provide itemized bills for local as well as long distance service on a monthly basis, such that customers can see, each month, what local services they have subscribed to, and what they are paying for each service. Bell and Aliant (NB and Nfld), however, provide itemized bills only once per year and when there is a change to a relevant service or service charge. Otherwise, the monthly bill provided to residential customers contains no itemization of local services. MTS used to follow the practice currently followed by Bell and Aliant, but has reverted to monthly itemization. SaskTel has also begun implementing monthly itemized statements to its customers.
3. The Consumer Groups strongly support the Commission’s preliminary view that all ILECs should provide customers with itemized billing statements on a monthly basis.

Separate the issues of billing frequency from billing detail

4. In its submission, Aliant argues that “Customers should be able to specify the billing detail they desire and the frequency of its delivery.” (para.6)
5. It may be helpful to separate the issues of billing frequency and billing detail for the purposes of this proceeding. Billing frequency per se (i.e., monthly as opposed to quarterly or semi-annual) is not an issue in this proceeding; all ILECs appear to bill their residential customers on a monthly basis, and are not proposing to change this practice. It is in this context that the Commission has invited comments on the issue of itemized billing statements.
6. The bottom line, in the Consumer Groups’ submission, is that all bill statements should be sufficiently detailed that customers can determine from each billing statement what services they are subscribed to and how much they are paying for each service. Thus, as long as companies bill for service on a monthly basis, each monthly bill should include the minimum level of detail considered adequate by the CRTC.
7. On the question of how frequently bill statements should be delivered to customers, the Consumer Groups submit that the standard practice of monthly billing should not change without a public proceeding to examine the implications of less frequent billing.

Why bill detail is important

8. Itemization of each separate charge on each bill statement is particularly important so that customers can see, on any given statement of account, what optional local services they are subscribed to, and how much they are being charged for each optional service.
9. Without such itemization, customers can lose track of the various optional services they are subscribed to, and can end up paying for services they neither want nor need. For example, customers seeking ways to reduce their monthly telephone bill may be unaware of the fact that they can do so by canceling certain optional services. They may instead assume that the consolidated local charge shown on the bill is entirely mandatory.
10. In addition, customers may believe that they have ceased subscribing to a given service (e.g., an optional service provided free of charge for a limited period of time, or a rental telephone set no longer used) when in fact the company is continuing to charge them for the service. Anecdotal evidence available to the Consumer Groups indeed suggests that such misunderstandings are not uncommon when companies fail to provide itemized bills on a monthly basis.
11. Both Bell and Aliant argue that their customers are satisfied without monthly itemized billing, and that requiring them to provide detail on a monthly basis to every customer is therefore unnecessary and inefficient. They cite QofS monitoring results indicating that customer complaints regarding billing are minimal.
12. In response, the Consumer Groups note that just because customers have not formally complained in large numbers about the lack of bill detail on a monthly basis does not mean that they are satisfied with it. In order to properly test customer satisfaction on this issue, focus groups and/or customer surveys need to be conducted. Indeed, Bell’s own focus group testing indicates that customers prefer the level of detail provided by Bell on the annual statement.
13. Given the importance of the underlying principle (full information to customers), however, the Consumer Groups submit that testing of consumer preferences on this issue is unnecessary. Customers who wish to forego their right to a monthly detailed bill may be able to do so upon request. Others should be entitled to a detailed bill as a matter of default.
14. In Telecom Decision 86-7, the Commission ordered ILECs to provide customers with detailed itemized bills “at service commencement, after any rate or service and equipment changes and, at a minimum, once a year”.
15. It is important to recognize the tremendous changes that have occurred to residential telephone service since 1986. At that time, customers had relatively few options in terms of local service. Over the past 16 years, dozens of new optional services have been made available to customers, and the companies have transformed themselves into aggressive marketers of these services such that large numbers of customers subscribe not only to basic local service, but also to any number of local optional services. Indeed, average revenues per residence NAS for optional local services in 2001 ranged from app. $5-$9 per month, according to data provided by the Companies in the recent Price Cap review proceeding.
16. The fact that annual itemization of local service charges was considered appropriate in 1986 thus in no way suggests that annual itemization of such charges is sufficient for telephone customers in 2002. The context is now entirely different.
17. It is further instructive that the US Federal Communications Commission has seen fit to require telephone companies to provide “full and non-misleading descriptions of all charges” on all telephone bills. Specifically, the FCC rules state that:
“Charges contained on telephone bills must be accompanied by a brief, clear, non-misleading, plain language description of the service or services rendered. The description must be sufficiently clear in presentation and specific enough in content so that customers can accurately assess that the services for which they are billed correspond to those that they have requested and received, and that the costs assessed for those services conform to their understanding of the price charged.”
18. Canadian consumers should be no less protected than American consumers in this regard.

Bill detail vs. paper reduction

19. Aliant states that NBTel withdrew monthly itemized billing “a number of years ago when customers raised serious concerns about the amount of paper utilized to provide monthly billing detail”.
20. The Consumer Groups share the environmental concerns raised by these customers, and concur with the goal of minimizing unnecessary paper usage. However, this goal must be weighed against the goal of providing adequate billing information to customers on an ongoing basis. In any event, the goal of paper reduction can be achieved while providing meaningful bill detail to customers who have not requested otherwise. Specifically, much of what appears on current bills is relatively unimportant (in some cases even meaningless) from the consumer perspective; the length of billing statements can be significantly reduced without sacrificing important bill detail.
21. In any case, the Consumer Groups submit that the issue of paper reduction centers around the manner in which charges and services are identified on the bill, not whether or not bill detail is provided. In para.806 of Decision 2002-34, the Commission “concludes that it would be appropriate for these issues of content and related issues to be considered by the BMT Committee”. That is the appropriate forum in which to discuss ways of minimizing paper usage in the billing process.

Billing detail should be the default

22. Both Bell and Aliant propose to offer monthly bill detail only to those customers who request it. The companies would make customers aware of this option via a bill insert. In this way, they suggest that the costs of monthly billing can be minimized while customer desires for more frequent billing detail can be accommodated.
23. In other words, the companies wish to make less frequent bill detail the default (or standard) service offering. Customers would be able to get more frequent bill detail, but only upon request. This proposal has a number of important implications:

  • because results are always biased toward the default, many customers who would in fact prefer the option of detailed billing will never exercise it (whereas, if the default were detailed billing, many customers who would be satisfied with less frequent detail will never choose it);
  • because of this inertia effect, many people will be denied the billing detail they need in order to make informed choices on an ongoing basis; and
  • the companies will be in a position to treat the option of more frequent billing detail as a value-added service, for which a charge may apply.

1. If the companies wish to ensure that all customers who want monthly bill detail get it, they would treat monthly billing detail as the default, and offer the option of less frequent billing detail to those who specifically request it. Instead, they have proposed an approach which achieves meaningful consumer choice only if all customers are fully informed of their options, appreciate the implications thereof, and can quickly and easily exercise the option at no cost. In the Consumer Groups’ submission, none of these preconditions to meaningful choice apply.
2. First, many customers will not be aware of the option, despite any number of bill inserts and statements on the bill. In a nation-wide survey conducted by EKOS Research for PIAC and other organizations in 1996, 34% of respondents said that they rarely or never “read the inserts the telephone company sometimes sends with its bills”. A further 35% only read inserts “sometimes”. Recent experience with customer complaints regarding Bell Canada’s imposition of a minimum $4.95 charge on its First Rate discount toll plan further confirms that many customers do not notice important messages delivered via bill insert (many customers were unaware of the new charge until it appeared on their bill, despite a bill insert notifying them of it in advance).
3. Given that most bill inserts received by customers fall into the category of “junk mail” (i.e., marketing material), it is not surprising that many customers fail to notice the few that contain important information. In the Consumer Groups’ submission, important notices cannot be effectively communicated through a medium which is used primarily for marketing purposes.
4. Second, requiring customers to write or telephone the service provider in order to obtain detailed bills on a monthly basis is sufficiently onerous that many customers who would prefer monthly detail will not in fact get it. Even if they are adequately informed, many customers will fail to take advantage of the option provided, simply because of the effort required to do so. Telephone companies should not be permitted to take advantage of this “inertia” effort to the detriment of consumers.
5. Clearly, the companies are seeking ways to reduce their billing costs. One way is to provide monthly billing detail only to those customers who request it. (Another is to replace paper bills with electronic bills.) While efforts to reduce unnecessary costs are commendable, The Consumer Groups submit that the companies’ proposal goes too far in terms of sacrificing important customer information for the sole purpose of reducing cost.
6. The default level of service provided to customers should be that which (a) automatically provides customers with the information necessary to make informed choices about their ongoing service on an ongoing basis, and (b) conforms to general customer expectations and desires. Options for a lower (or less costly) level of service, whether it be replacement of the paper bill with an online bill, less billing detail, or any other option, should not be forced upon any customer without their informed consent.
7. Billing detail should therefore be provided on a monthly basis to all customers, unless they request otherwise. Moreover, there should be no extra cost to the customers associated with this level of service. While the companies have not yet attempted to charge for monthly detailed bills, it would be a logical next step for them to take once they establish a standard of billing involving less-than-monthly detail.
8. The Consumer Groups are concerned with this apparent trend toward lower standard levels of service to residential customers. Monthly bill detail may be just the first example: paper bills could be the next. It is important that a Consumer Bill of Rights clearly establish the standard of service to which all customers are entitled without extra cost.

The costs of providing monthly bill detail are covered by existing rates

9. Both companies state that a requirement to provide monthly billing detail would cause them to incur costs, both initial and ongoing. Hence, they argue that all such costs should be recoverable from ratepayers. Specifically, Bell proposes that “it should be allowed to draw down from the deferral account any incremental expenses and/or capital costs which would be attributable to the provision of detailed billing on a monthly basis.” (para.5) It is not clear whether the companies are proposing to treat these expenses as exogenous factors.
10. The Consumer Groups strongly oppose any such downloading of normal costs of business onto ratepayers, for a number of reasons. First, it would be unfair to those companies who have, in the best interests of their customers, implemented or continued to implement monthly itemized bills without any such cost recovery. It would instead reward those companies who have chosen to reduce customer service in the name of cost reduction.
11. Second, it would ignore the cost savings that these companies have generated as a result of infrequent billing detail. The general marketplace standard for billing of ongoing services is to provide full detail on a monthly basis. This is what customers expect, and what they need in order to make informed purchasing decisions on an ongoing basis. Companies that have saved money by providing less than this standard of billing should not now be able to recover from ratepayers the cost difference between the two approaches to billing.
12. Third, the new price cap regime was established on the basis of general cost data and regulatory principles; the companies were not subjected to revenue requirement examinations, and rates were not “rebased”. The companies thus benefited from a lack of scrutiny of their reduced costs (vs. rates) for specific services. For them to suggest now that increased costs as a result of the price cap decision should be treated like exogenous factors and recovered via the deferral account is inconsistent and unfair to ratepayers.
13. Finally, the Commission’s direction to provide monthly bill detail comes as part of the establishment of the new price cap regime, not as a regulatory requirement imposed on the companies during the course of a price cap regime. The fact that there are costs associated with this direction has been taken into account by the Commission in the establishment of the new price cap formula. To recover such costs via the deferral account would therefore result in double-counting, to the benefit of company
All of which is respectfully submitted,
Philippa Lawson
Counsel for the Consumer Groups
cc: Interested Parties, PN 2001-37
CRTC proceedings